The Commonwealth Bank’s reputation has taken a battering at the Royal Commission, and a veteran of 13 years on the top table of the Bank’s Executive Committee explains what went wrong and where we should head.
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This exclusive annual scorecard checks bank results in a difficult year, and looks ahead at the hurdles and opportunities for the sector that many Australians rely on for their income.
The history of the Big Four banks is littered with bad strategies by overpaid executives, taxpayer-funded rescues and a lack of competition. As the banks clean up the Royal Commission mess, Macquarie has overall done better.
SMSFs are continuing to use the ASX20 as a bargain buy, but are also diversifying into mid caps and international shares via direct investments, ETFs and LICs.
About half of companies reported as expected in their latest financial results, and the rest were split between favourable and disappointing. Valuations are not cheap but some companies deserve to be expensive.
Round 5 of the Royal Commission focused on superannuation. Conflicts of interest, trustee responsibilities and delays in meeting the legal obligation to transfer default clients to MySuper products featured.
In the week that marks 30 years since Chris Cuffe joined what became Colonial First State, a former colleague reflects on what makes a business successful, and what may have been lost from those early days.
The Australian market again delivered strong returns in 2017-2018 with big sector differences, but there were large variations in global performance depending on the currency hedging strategy.
There’s a fundamental difference between banking and wealth management: bankers have no fiduciary obligation to their clients. It’s difficult for bankers to own fund managers and financial advice and fully accept the difference.
While property and equity markets remain expensive by historical standards, yields achievable relative to risk remain strong in the hybrid market, notwithstanding recent upticks in price.
Our regular check on the ‘star’ performances from the Australian banks’ May 2018 reporting season in the face of low credit growth, increased regulatory scrutiny and the sales of insurance and wealth management divisions.
Factors relating to technical adjustments, timing of bank reporting and offshore influences have created wider spreads on bonds and hybrids which should mean revert in time.
The Australian banks are on firm ground with strong capital ratios, few bad loan problems and sustainable dividends, but lower demand for credit, tighter margins and the bank levy give no room for complacency.
A look at the ‘star’ performances from the Australian banks’ financial results for 2017 and how they have handled non-bank competition, government levies and business divestments.
The merit of appointing an internal or external CEO depends on the company’s circumstances. Internal appointments tend to be more successful, although alignment of interests with shareholders is critical.
Hybrids are complex instruments but they can be viewed as a bond with an embedded option, and they convert to equity in certain circumstances. Investors should consider the risk of this happening.